Weed stocks rally on cannabis reform hopes

Cannabis companies are rallying amid continued optimism that President Trump will deliver for the industry and pass federal weed reform.

Canadian cannabis companies like Tilray, Canopy Growth, and SNDL Inc. all rallied on Monday as momentum around cannabis rescheduling picks up. The Wall Street Journal reported earlier this month that Trump was “considering” reclassifying marijuana as a less dangerous drug, and since then several of his political allies have thrown their support behind the issue.

Under former President Biden, the Department of Justice announced in April 2024 that it would recommend reclassifying marijuana, though that process has lagged. Under the current regulatory scheme, American cannabis operators struggle with limited access to banking, an unfriendly tax code, and high levels of debt without the benefit of bankruptcy protections.

Analysts appear to be growing bullish: Jefferies raised its price target for Tilray from $1.50 to $2.00 on Friday, and SNDL’s lone analyst from ATB Capital Markets raised their target from $2.26 to $4.50 on August 18.

Notably, the aforementioned Canadian cannabis companies do not currently sell pot in the US, but they have in various ways positioned themselves as able to quickly set up distribution channels in the event that the regulatory landscape eases up. Those companies have struggled to grow within Canada and have expanded to international markets, such as Europe.

Rumors (of which there have been several) regarding changes to the regulatory scheme for marijuana have been one of the largest catalysts for price movement in weed stocks. But federal cannabis reform is an issue that’s found itself somewhat politically homeless.

Democrats have typically been more sympathetic to the issue, but most of them represent places where it’s already legal on a state level. Republicans have historically been more aligned with moral arguments against weed reform, but in recent years it has garnered support, though it remains less than a top priority for both parties at a federal level.

Jerry Derevyanny, a partner at cannabis investment firm Bengal Capital, said it’s still unclear exactly what move the administration will make on cannabis. Anything short of a proposed final rule on rescheduling is unlikely to make much of a difference for these companies.

“I’m like a beaten puppy — I’m too scared to be optimistic anymore,” he told Sherwood News. “I think investors will rally a bit and then you’ll get a pullback as investors realize things aren’t coming as soon as they expect.”